REGISTRATION RIGHTS AGREEMENT
THIS AGREEMENT dated as of this 23rd day of April, 2004.
BETWEEN:
MITEL NETWORKS CORPORATION, a corporation incorporated under the laws of
Canada (the "CORPORATION")
-and-
EDGESTONE CAPITAL EQUITY FUND II-B GP, INC., as agent for EdgeStone
Capital Equity Fund II-A, L.P. and its parallel investors, and EDGESTONE
CAPITAL EQUITY FUND II NOMINEE, INC., as nominee for EdgeStone Capital
Equity Fund II-A, L.P. and its parallel investors ("EDGESTONE")
-and-
MITEL SYSTEMS CORPORATION, a corporation incorporated under the laws of
Canada ("SYSTEMS")
-and-
MITEL KNOWLEDGE CORPORATION, a corporation incorporated under the laws of
Canada ("KNOWLEDGE")
-and-
ZARLINK SEMICONDUCTOR INC., a corporation incorporated under the laws of
Canada ("ZARLINK")
-and-
POWER TECHNOLOGY INVESTMENT CORPORATION, a corporation incorporated under
the laws of Canada ("PTIC")
-and-
XXXXXX XXXXXX CORPORATION, a corporation incorporated under the laws of
the Province of Newfoundland ("WCC")
RECITALS:
A. Prior to or contemporaneously with the execution and delivery of this
Agreement: (i) the Corporation and EdgeStone entered into a subscription
agreement (the "SUBSCRIPTION
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AGREEMENT") in connection with the issuance and sale to EdgeStone of
Series A Shares (as such term is defined below); and (ii) WCC and PTIC
received Series B Shares (as such term is defined below) on the exchange
of certain Common Shares of the Corporation.
B. The Series A Shares and Series B Shares referred to above are being issued
by the Corporation prior to or contemporaneously with the execution and
delivery of this Agreement such that the capitalization of the Corporation
immediately upon execution of this Agreement is as described in Schedule A
to the Shareholders Agreement (as such term is defined below).
C. As an inducement to EdgeStone, Systems, Knowledge, Zarlink, PTIC and WCC
(collectively, the "INVESTORS") to consummate or approve the transactions
referred to above, the Corporation hereby enters into the covenants and
agreements herein with each of the Investors respecting the registration
of the Registrable Securities under the United States Securities Act of
1933 and/or the qualification of such Registrable Securities for trading
under the securities laws of the provinces of Canada, as set forth herein.
NOW THEREFORE the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS, PRINCIPLES OF INTERPRETATION
AND REPRESENTATIONS AND WARRANTIES
"ADDITIONAL COMMON SHARES" has the meaning set forth in the Articles of
Amendment;
"AFFILIATE" of a Person means any Person that would be deemed to be an
"affiliated entity" of such first-mentioned Person under Rule 45-501 promulgated
under the Securities Act (Ontario) as it exists on the date of this Agreement;
"AGGREGATE REGISTRABLE SECURITIES" means, as of any date, the number of
outstanding Registrable Securities, calculated on an as-if converted to Common
Shares basis;
"AGREEMENT" means this Registration Rights Agreement, including all schedules
hereto and all amendments or restatements hereof;
"ARTICLES OF AMENDMENT" means the articles of amendment of the Corporation
creating the Preferred Shares in the form attached to the Shareholders
Agreement;
"AS-IF CONVERTED TO COMMON SHARES BASIS" means, at any time and from time to
time, assuming the conversion or exchange of all outstanding Registrable
Securities that are Preferred Shares or are otherwise convertible or
exchangeable into Common Shares which are exercisable, convertible or
exchangeable on the date of the calculation at the respective conversion prices
or exchange rates, as the case may be, applicable at such time including,
without limitation, the exercise of the EdgeStone Warrants which are exercisable
on the date of the calculation for the number of Common Shares then issuable
thereunder;
"BOARD OF DIRECTORS" means the Board of Directors of the Corporation;
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"BUSINESS DAY" means any day, other than a Saturday or Sunday, on which
chartered banks in Ottawa, Ontario and New York, New York are open for
commercial banking business during normal banking hours;
"CANADIAN COMMISSIONS" means the securities commission or similar regulatory
authority of each of the provinces or territories of Canada and any successor
regulatory authorities having similar powers;
"CANADIAN INCIDENTAL QUALIFICATION" has the meaning specified in subsection 2.3
of this Agreement;
"CANADIAN QUALIFICATION" means a Canadian Incidental Qualification or a Canadian
Requested Qualification as the context may require;
"CANADIAN REQUESTED QUALIFICATION" has the meaning specified in Section 2.1 of
this Agreement;
"CANADIAN SECURITIES LEGISLATION" means, collectively, the applicable securities
legislation, regulations, rules, policies, blanket rulings, decisions and orders
of each of the provinces of Canada and the Canadian Commissions;
"CBCA" means the Canada Business Corporations Act as amended and any successor
legislation;
"COMMISSION(S)" means (i) with respect to a U.S. Registration, the SEC, and (ii)
with respect to a Canadian Qualification, the applicable Canadian Commission(s);
"COMMON SHARES" means the Common Shares in the capital of the Corporation,
including the Common Shares currently issued and any Common Shares that may be
issued after the date hereof;
"CONTROL" means, with respect to any Person at any time,
(i) holding, as owner or other beneficiary, other than solely as the
beneficiary of an unrealized security interest, directly or
indirectly: (A.) more than fifty percent (50%) of the voting
securities of that Person; or (B.) securities of that Person
carrying votes sufficient to elect or appoint the majority of
individuals who are responsible for the supervision or management of
that Person; or
(ii) the exercise of de facto control of that Person whether direct or
indirect and whether through the ownership of securities, by
contract or trust or otherwise;
and the terms "CONTROLS", "CONTROLLING" and "CONTROLLED" have corresponding
meanings;
"EDGESTONE GROUP" means:
(a) any Affiliate of EdgeStone;
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(b) any other Person, provided that EdgeStone or any Affiliate thereof
has the exclusive right to exercise all rights of EdgeStone
transferred hereunder on behalf of such Person;
(c) any Person whose funds are managed by EdgeStone or an Affiliate of
EdgeStone;
(d) upon the termination or dissolution of any limited partnership or
other entity that is a Person referred to in clause (b), (A) the
beneficial holders of interests in such Person, and (B) any other
Person referred to in clause (b), whether or not, in either case, an
Affiliate described in clause (a) has the exclusive right to
exercise the rights of EdgeStone transferred hereunder on behalf of
such beneficial holder or Persons; and
(e) EdgeStone Capital Equity Fund II-A, L.P. and/or any Person which
agrees to invest with it on a parallel or co-investment basis (and
the respective partners thereof, if any) in the manner contemplated
in the constating documents of EdgeStone Capital Equity Fund II-A,
L.P.
"EDGESTONE PURCHASE OPTION" means the option of EdgeStone to purchase Series A
Shares with an aggregate purchase price of up $5,000,000 pursuant to Section 3.2
of the Subscription Agreement;
"EDGESTONE WARRANTS" means the Series 1 Warrants and Series 2 Warrants granted
by the Corporation to EdgeStone on the date hereof, and any additional warrants
granted on the exercise of the EdgeStone Purchase Option;
"HOLDER" means each Investor so long as it holds Registrable Securities, or any
assignee or transferee of record of such Registrable Securities and the
registration and qualification rights pursuant to this Agreement related thereto
(in accordance with Section 3.5 hereof), or, with respect to Section 2.11
hereof, any such Person who has become a seller of Registrable Securities;
"HOLDERS MAJORITY" means the holders of not less than fifty percent (50%) of the
Registrable Securities held by all of the Holders, calculated on an as-if
converted to Common Shares basis, which holders must include EdgeStone as long
as EdgeStone continues to hold at least 5,000,000 Common Shares (as adjusted for
share splits, consolidations and the like);
"INCIDENTAL REGISTRATION" means, as applicable, a U.S. Incidental Registration
or a Canadian Incidental Qualification;
"INITIAL PUBLIC OFFERING" means the initial public offering of Common Shares or
other securities in the capital of the Corporation or the securities in the
capital of a Successor Corporation or any other transaction, as a result of
which (in either case) the shares of the Corporation or the Successor
Corporation are listed and posted for trading, traded or quoted on one or more
of the Toronto Stock Exchange, the New York Stock Exchange or the NASDAQ
National Market System (provided, that, any filing of a registration statement
or similar instrument with the SEC under the U.S. Exchange Act in fulfillment of
the Corporation's existing obligations as a foreign private issuer shall be
deemed not to constitute an Initial Public Offering for the purposes of this
Agreement);
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"LONG FORM DEMAND NOTICE" has the meaning specified in Section 2.1 of this
Agreement;
"XXXXXXXX GROUP" means:
(a) Xx. Xxxxxxx X. Xxxxxxxx, his spouse or former spouse, any lineal
descendant of Xx. Xxxxxxx X. Xxxxxxxx, any spouse or former spouse
of any such lineal descendant, and their respective legal personal
representatives;
(b) the trustee or trustees of any trust (including without limitation a
testamentary trust) for the exclusive benefit of any one or more
members of the Xxxxxxxx Group;
(c) any corporation all of the issued and outstanding shares of which
are beneficially owned by any one or more members of the Xxxxxxxx
Group;
(d) any partnership all of the partnership interests in which are
beneficially owned by any one or more members of the Xxxxxxxx Group;
and
(e) any charitable foundation Controlled by any one or more members of
the Xxxxxxxx Group,
and, for this purpose, a trustee or trustees referred to in clause (b)
above shall be deemed to beneficially own any shares or partnership
interests held by them.
"OTHER AGREEMENTS" means the Shareholders Agreement, and with respect to
EdgeStone, the Subscription Agreement and all of the agreements, instruments,
certificates, and other documents, including the EdgeStone Warrants, executed
and delivered by or on behalf of the Corporation or EdgeStone or any of their
respective Affiliates in connection with the Subscription Agreement and the
transactions contemplated herein or therein;
"PERMITTED TRANSFEREE" of any Person means:
(i) in the case of a Person who is a natural person: (A) the spouse of
such Person; (B) any lineal descendant of such Person or a spouse of
any such descendant; (C) a trust (including, without limitation, a
testamentary trust) solely for the benefit of one or more of such
Person, the spouse of such Person or any lineal descendant of such
Person or a spouse of any such descendant; (D) any self-directed
RRSP controlled by such Person; or (E) a corporation of which all of
the outstanding shares of each class of shares of such corporation
are beneficially owned, or in the case of Xxxxxxx X. Xxxxxxxx (if
Xxxxxxxx hereafter becomes a Holder) Controlled, directly or
indirectly, in any manner (including, without limitation, through
intermediary corporations or trusts), by one or more of such Person,
the spouse of such Person, any lineal descendant of such Person or a
spouse of any such descendant or such trust;
(ii) in the case of a corporation: (A) any shareholder of such
corporation, if such shareholder either alone or together with one
or more Permitted Transferees of such shareholder beneficially owns,
or in the case of Xxxxxxx X. Xxxxxxxx (if Xxxxxxxx hereafter becomes
a Holder) Controls, directly or indirectly, in any
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manner (including, without limitation, through intermediary
corporations or trusts), all of the outstanding shares of each class
of shares in the capital of such corporation; (B) any Permitted
Transferee of such shareholder; or (C) an Affiliate, all of the
shares of which are owned by such corporation and/or any Permitted
Transferee (other than under this subclause (ii)) of such
corporation;
(iii) in the case of a Person which is a trustee: (A) any beneficiary of
such trust; (B) another trustee, provided that the class of
beneficiaries is limited to Permitted Transferees of the
beneficiaries of the original trust; or (C) any Permitted Transferee
of such beneficiary;
(iv) in the case of a Person which is an estate of a deceased Person, a
Permitted Transferee of such deceased person determined pursuant to
this definition as if such Person were not deceased or a legal
personal representative of such Person holding on behalf of such
Permitted Transferees;
(v) in the case of EdgeStone, any member of the EdgeStone Group; and
(vi) in the case of any member of the Xxxxxxxx Group, includes any other
member of the Xxxxxxxx Group.
"PERSON" includes any individual, sole proprietorship, partnership,
unincorporated association, unincorporated syndicate, unincorporated
organization, trust, body corporate, and a natural Person in his capacity as
trustee, executor, administrator, or other legal representative;
"PREFERRED SHARES" means the Series A Shares and the Series B Shares;
"REGISTRABLE SECURITIES" means:
(i) the Common Shares held by Zarlink on the date of this Agreement, as
set forth in Schedule A;
(ii) the Common Shares issued or issuable on the conversion of the
Preferred Shares held by any of the Investors on the date of this
Agreement, as set forth in Schedule A (including, without
limitation, any Additional Common Shares);
(iii) any Common Shares issued or issuable on the conversion of any
Preferred Shares issued pursuant to the EdgeStone Purchase Option;
(iv) any Common Shares issued or issuable on the exercise of the
EdgeStone Warrants;
(v) the Common Shares held by Systems and Knowledge on the date of this
Agreement, as set forth in Schedule A;
(vi) any Common Shares issued or issuable as a result of any share
splits, share dividends, reclassifications, capital reorganizations,
or similar events affecting the Shares or Convertible Securities
referred to in (i), (ii), (iii), (iv) or (v) above;
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"REQUESTED REGISTRATION" means, as applicable, a U.S. Requested Registration or
a Canadian Requested Qualification;
"SERIES A SHARES" means the Class A Convertible Preferred Shares, Series 1 in
the capital of the Corporation, including the Class A Convertible Preferred
Shares, Series 1 currently issued and any Class A Convertible Preferred Shares,
Series 1 that may be issued after the date hereof;
"SERIES B SHARES" means the Class B Convertible Preferred Shares, Series 1 in
the capital of the Corporation, including the Class B Convertible Preferred
Shares, Series 1 currently issued and any Class B Convertible Preferred Shares,
Series 1 that may be issued after the date hereof;
"SHAREHOLDERS AGREEMENT" means the Shareholders Agreement of even date herewith
between the Corporation, the Investors and Xxxxxxx X. Xxxxxxxx, as the same may
be amended from time to time in accordance with its terms;
"SHARES" means the Common Shares and the Preferred Shares;
"SHORT FORM DEMAND NOTICE" has the meaning specified in Section 2.2 of this
Agreement;
"SHORT FORM REGISTRATION" means, as applicable, a U.S. Short Form Registration
or a Canadian Short Form Qualification;
"SEC" means the United States Securities and Exchange Commission;
"SECURITIES LAWS" means, collectively, the Canadian Securities Legislation and
the U.S. Securities Legislation;
"SUCCESSOR CORPORATION" has the meaning specified in Section 1.4 of this
Agreement;
"UNDERWRITER'S MAXIMUM NUMBER" means in connection with a firm underwritten
registration or offering of Registrable Securities or any shares of the capital
stock or other securities in the capital of the Corporation, a specified maximum
number of securities that, in the written opinion of the managing underwriters,
may successfully be included in such registration or offering having regard to
the dictates of then current and anticipated market conditions. For the purposes
of this definition, managing underwriters shall be investment banking firms of
nationally recognized reputation;
"U.S. EXCHANGE ACT" means the United States Securities Exchange Act of 1934, as
amended, or any successor statute thereto, and the rules and regulations of the
SEC promulgated thereunder, all as the same are in effect at the time;
"U.S. INCIDENTAL REGISTRATION" has the meaning specified in Section 2.3 of this
Agreement;
"U.S. REGISTRATION" means a U.S. Incidental Registration, a U.S. Requested
Registration or a U.S. Short Form Registration, as the context may require;
"U.S. REQUESTED REGISTRATION" has the meaning specified in Section 2.1 of this
Agreement;
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"U.S. SECURITIES ACT" means the United States Securities Act of 1933, as
amended, or any successor statute thereto, and the rules and regulations of the
SEC promulgated thereunder, all as the same are in effect at the time;
"U.S. SECURITIES LEGISLATION" means, collectively, the securities laws of the
United States, including the U.S. Exchange Act, the U.S. Securities Act, state
securities or "blue sky" laws within the United States, and all rules,
regulations and ordinances promulgated thereunder; and
"U.S. SHORT FORM REGISTRATION" has the meaning specified in Section 2.2 of this
Agreement.
1.1 CERTAIN RULES OF INTERPRETATION
In this Agreement:
(a) CURRENCY - Unless otherwise specified, all references to money
amounts are to lawful currency of Canada.
(b) GOVERNING LAW - This Agreement is a contract made under and shall be
construed, interpreted and enforced in accordance with the laws of
the Province of Ontario and the federal laws of Canada applicable in
the Province of Ontario (excluding any conflict of law rule or
principle of such laws that might refer such interpretation or
enforcement to the laws of another jurisdiction). Subject to the
provisions of Section 3.7, any action, suit or proceeding arising
out of or relating to this Agreement shall be brought in the courts
of the Province of Ontario and each of the Parties hereby
irrevocably submits to the non-exclusive jurisdiction of such
courts.
(c) HEADINGS - Headings of Articles and Sections are inserted for
convenience of reference only and shall not affect the construction
or interpretation of this Agreement.
(d) NUMBER AND GENDER - Unless the context otherwise requires, words
importing the singular include the plural and vice versa and words
importing gender include all genders.
(e) STATUTORY REFERENCES - A reference to a statute includes all
regulations made pursuant to such statute and, unless otherwise
specified, the provisions of any statute or regulation which amends,
supplements or supersedes any such statute or any such regulation.
(f) TIME PERIODS - Unless otherwise specified, time periods within or
following which any payment is to be made or act is to be done shall
be calculated by excluding the day on which the period commences and
including the day on which the period ends and by extending the
period to the next Business Day following if the last day of the
period is not a Business Day.
(g) BUSINESS DAYS - If any payment is required to be made or other
action is required to be taken pursuant to this Agreement on a day
which is not a Business Day, then such payment or action shall be
made or taken on the next Business Day.
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(h) INCLUDING - Where the word "including" or "includes" is used in this
Agreement, it means "including (or includes) without limitation".
(i) NO STRICT CONSTRUCTION - The language used in this Agreement is the
language chosen by the parties to express their mutual intent, and
no rule of strict construction shall be applied against any party.
(j) SEVERABILITY - If, in any jurisdiction, any provision of this
Agreement or its application to any Party or circumstance is
restricted, prohibited or unenforceable, such provision shall, as to
such jurisdiction, be ineffective only to the extent of such
restriction, prohibition or unenforceability without invalidating
the remaining provisions of this Agreement and without affecting the
validity or enforceability of such provision in any other
jurisdiction or without affecting its application to other Parties
or circumstances.
1.2 ENTIRE AGREEMENT
This Agreement and the Other Agreements together constitute the entire
agreement between the Parties and set out all the covenants, promises,
warranties, representations, conditions, understandings and agreements between
the Parties with respect to the subject matter of this Agreement and the Other
Agreements and supersede all prior understandings, agreements, negotiations and
discussions, whether oral or written, including, without limitation, those
contained in a term sheet dated January 23, 2004 between the Corporation and
EdgeStone Capital Equity Fund II-A GP, Inc., and any amendments thereto.
1.3 REPRESENTATIONS AND WARRANTIES OF THE CORPORATION
The Corporation hereby represents and warrants that, as at the date
hereof:
(a) except for the registration and qualification rights provided for in
this Agreement, the Corporation is not under any obligation to
register or to qualify by filing a registration statement or
prospectus, nor has it agreed to grant registration or qualification
rights, with respect to any presently outstanding securities or
securities which may hereafter be issued, under the U.S. Securities
Legislation or under Canadian Securities Legislation, as applicable,
or the securities laws of any other jurisdiction; and
(b) it is not a party to any agreement which is inconsistent with the
rights and obligations of the Corporation hereunder or otherwise
conflicts with the provisions of this Agreement.
1.4 REVERSE TAKE-OVERS OR SIMILAR TRANSACTIONS
In the event that the Initial Public Offering is effected by the
distribution of securities in the capital of another Person which has been
formed or becomes an Affiliate of the Corporation for the purpose of taking the
business of the Corporation public (the "SUCCESSOR CORPORATION"): (i) references
in this Agreement to "the Corporation" shall be deemed to refer to the Successor
Corporation; (ii) references in this Agreement to the term "Registrable
Securities" shall be deemed to refer to the securities in the capital of the
Successor Corporation issued in exchange
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for the outstanding Registrable Securities and/or issued as consideration for
the sale or transfer by the Corporation of all or substantially all of its
assets; (iii) the Successor Corporation shall become a party to this Agreement
and assume all the obligations of the Corporation under this Agreement; and (iv)
all of the other terms and provisions of this Agreement shall apply mutatis
mutandis to the Successor Corporation and to the securities described in clause
(ii) above.
ARTICLE 2
REGISTRATION RIGHTS
2.1 DEMAND REGISTRATIONS
(a) If at any time after 180 days following the closing of the
Corporation's Initial Public Offering the Corporation receives a
written request (a "LONG FORM DEMAND NOTICE") that the Corporation
effect the registration under the U.S. Securities Legislation (a
"U.S. REQUESTED REGISTRATION") or the qualification for distribution
(a "CANADIAN REQUESTED QUALIFICATION") under the applicable Canadian
Securities Legislation of the Canadian provinces or territories
designated in such request (the "DESIGNATED CANADIAN JURISDICTIONS")
of all or part of the Registrable Securities from the Holders of at
least 10,000,000 of the Aggregate Registrable Securities, which must
include EdgeStone so long as EdgeStone continues to hold at least
5,000,000 Common Shares (as adjusted for share splits,
consolidations and the like) the Corporation shall, as soon as
possible but in any event within one hundred twenty (120) days of
the receipt of the Long Form Demand Notice, file, with respect to
all of the Registrable Securities that the Corporation has been
requested to register (including Registrable Securities requested to
be included in such registration pursuant to clause (f) below), in
the event of a U.S. Requested Registration, a registration statement
under the U.S. Securities Act on Form S-1 or F-1 (or any successor
to Form S-1 or F-1), and, in the event of a Canadian Requested
Qualification, a prospectus under the Canadian Securities
Legislation in each of the Designated Canadian Jurisdictions on Form
41-501F1 pursuant to OSC Rule 41-501 General Prospectus
Requirements, and, subject to Section 2.9(c) hereof, shall use its
best efforts to effect the registration or qualification (including,
without limitation, the execution of an undertaking to file
post-effective amendments and appropriate qualification under
applicable "blue sky" laws) under applicable Securities Laws of all
of such Registrable Securities as soon as possible.
(b) Notwithstanding clause (a) above: (i) the Corporation shall not be
obligated to effect a Requested Registration pursuant to this
subsection during the 180 day period immediately following any
previous Requested Registration pursuant to this section; (ii) the
Corporation shall not be obligated to effect more than one Requested
Registration in any 12 month period; and (iii) the Corporation shall
not be obligated to effect a Requested Registration pursuant to this
subsection unless the anticipated aggregate offering price of the
Registrable Securities to be sold is at least $8,000,000. Subject to
all limitations in the preceding sentence, the Corporation shall not
be obligated to effect more than two Requested Registrations during
the term of this Agreement. For the purpose of this clause (b), any
concurrent U.S. Requested Registration and Canadian Requested
Qualification shall be deemed to be a single Requested Registration
only.
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(c) Notwithstanding clause (a) above, (i) the Corporation shall not be
required to effect a Canadian Requested Qualification if the
Corporation has not previously been a "reporting issuer" of any
province of Canada; (ii) the Corporation shall not be required to
effect a Canadian Requested Qualification if the Corporation is then
a "reporting issuer" in good standing in the Province of Ontario and
each such Canadian Holder may then resell all its Registrable
Securities immediately under Rule 45-102 (or any successor rule)
without reliance upon any prospectus exemption under applicable
Canadian Securities Legislation in effect at such time; and (iii)
the Corporation shall not be required to effect a U.S. Requested
Registration if the Corporation has not previously effected an
Initial Public Offering in the United States.
(d) Notwithstanding clause (a) above, the Holders shall not be entitled
to deliver a Long Form Demand Notice requesting a U.S. Requested
Registration if the Corporation is then eligible to effect a U.S.
Short Form Registration pursuant to Section 2.2 hereof.
(e) Subject to Section 2.7, the Corporation may include in such
Requested Registration other securities of the Corporation for sale,
for the Corporation's account or for the account of any other
Person, if and to the extent that the managing underwriter
determines that the inclusion of such additional shares will not
interfere with the orderly sale of all of the Registrable Securities
of the participating Holders at a price range acceptable to the
requesting Holders.
(f) Upon receipt of a Long Form Demand Notice pursuant to this
subsection, the Corporation shall promptly give written notice of
such request to all Holders, and all Holders shall be afforded the
opportunity to join in such Requested Registration. Subject to
Section 2.7 the Corporation will be obligated to include in the
Requested Registration such number of Registrable Securities of any
Holder joining in such request as are specified in a written request
by such Holder received by the Corporation within 20 days after
delivery to the Holder of such written notice from the Corporation.
2.2 SHORT FORM REGISTRATIONS
(a) If at any time after 180 days following the closing of the
Corporation's Initial Public Offering in the United States, the
Corporation receives a written request from any Holder (a "SHORT
FORM DEMAND NOTICE") that the Corporation effect the registration of
Registrable Securities on Form S-3, Form F-3 or, if the Corporation
has prepared an underlying Canadian prospectus, Form F-10 (or any
successors to such forms) under the U.S. Securities Act (a "U.S.
SHORT FORM REGISTRATION"), the Corporation shall, with respect to
all of the Registrable Securities that the Corporation has been so
requested to register (including Registrable Securities requested to
be included in such registration pursuant to clause (d) below),
subject to Section 2.9(c) hereof, use its best efforts to effect
such registration (and all such related qualifications and
compliances), as soon as possible and in connection therewith shall
take such other steps as are necessary to permit or facilitate the
sale and distribution of such Registrable Securities.
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(b) Notwithstanding clause (a) above: (i) the Corporation shall not be
obligated to effect a Short Form Registration pursuant to this
subsection unless the anticipated aggregate offering price of the
Registrable Securities to be sold is at least $5,000,000; and (ii)
the Corporation shall not be obligated to effect a Short Form
Registration pursuant to this subsection if, as applicable, Form
S-3, Form F-3 or Form F-10 is not available for such an offering,
provided, that the Corporation shall use its commercially reasonable
efforts to so qualify as promptly as possible following its Initial
Public Offering in the United States for registration on Form S-3,
F-3 or F-10.
(c) Subject to Section 2.7, the Corporation may include in such Short
Form Registration other securities of the Corporation for sale, for
the Corporation's account or for the account of any other Person, if
and to the extent that the managing underwriter determines that the
inclusion of such additional shares will not interfere with the
orderly sale of all of the Registrable Securities of the
participating Holders at a price range acceptable to the requesting
Holders.
(d) Upon receipt of a Short Form Demand Notice pursuant to this
subsection, the Corporation shall promptly give written notice of
such request to all Holders, and all Holders shall be afforded the
opportunity to join in such Short Form Registration. Subject to
Section 2.7, the Corporation shall be obligated to include in the
Short Form Registration such number of Registrable Securities of any
Holder joining in such request as are specified in a written request
by such Holder received by the Corporation within 20 days after
delivery to the Holder of such written notice from the Corporation.
(e) Subject to the foregoing provisions of this Section 2.2, the
Corporation shall file a Form S-3, F-3 or F-10 registration
statement, covering the Registrable Securities requested to be
registered as soon as practicable after receipt of all written
requests from the Holders of Registrable Securities pursuant to this
Section 2.2, but in any event within sixty (60) days of the receipt
by the Corporation of the initial request for registration from the
Holder(s) pursuant to this Section 2.2.
2.3 INCIDENTAL REGISTRATIONS
If the Corporation for itself or for any of its security holders (other
than Holders) shall at any time or times after the date hereof determine, (i) to
register under the U.S. Securities Legislation any shares of its capital stock
or other securities (a "U.S. INCIDENTAL REGISTRATION") (other than: (A) the
registration of an offer, sale or other disposition of securities solely to
employees of, or other Persons providing services to, the Corporation, or any
direct or indirect subsidiary of the Corporation pursuant to an employee or
similar benefit plan; or (B) relating to a merger, acquisition or other
transaction of the type described in Rule 145 under the U.S. Securities Act or a
comparable or successor rule, registered on XXX Xxxx X-0 or similar or successor
forms), or (ii) to file a prospectus under any Canadian Securities Legislation
in order to qualify a distribution of securities in its capital stock or in a
form and manner that, with the appropriate changes, would permit some or all of
the Registrable Securities to be qualified for distribution to the public under
such prospectus (a "CANADIAN INCIDENTAL QUALIFICATION") (other than in
connection with any acquisition, securities exchange offer, corporate
reorganization, dividend reinvestment plan or stock option or other employee
benefit plan), the Corporation shall
13
notify each Holder of such determination at least 45 days prior to the filing of
such registration statement or prospectus, and upon the written request of any
Holder given in writing to the Corporation within 20 days after the receipt of
such notice, the Corporation shall, subject to Section 2.7, use its best efforts
as soon as practicable thereafter to cause any Registrable Securities specified
in such Holder's request to be included in such registration statement or
prospectus to the extent such registration or qualification is permissible under
the applicable Securities Laws and subject to the conditions of such applicable
Securities Laws.
2.4 U.S.-ONLY IPO
In the event that the Initial Public Offering is proposed to be made under
the U.S. Securities Act only without a simultaneous offering under Canadian
Securities Legislation, the Corporation shall, if requested by EdgeStone and if
necessary in order to permit EdgeStone to sell its Registrable Securities in the
United States free from resale restrictions under Canadian Securities
Legislation either as part of such Initial Public Offering or immediately
thereafter, concurrently with the Initial Public Offering use best efforts to
become a "reporting issuer" under the applicable Canadian Securities Legislation
of the Province of Ontario, and to take such other steps (including applying for
exemptive relief) as may required such that the Registrable Securities will be
free from restricted periods or seasoning periods under Canadian Securities
Legislation immediately on the closing of the Initial Public Offering.
2.5 EXPENSES
Except to the extent otherwise required by law, the Corporation shall pay
all expenses incurred in complying with its obligations to the Holders under
this Agreement, including without limitation, the cost of preparing any
registration statement or prospectus, all registration and filing fees, printing
expenses, fees and disbursements of counsel and independent public accountants
for the Corporation, fees and expenses (including reasonable counsel fees)
incurred in connection with complying with state securities or "blue sky" laws,
fees of the National Association of Securities Dealers, Inc., transfer fees of
transfer agents and registrars, translation costs, costs of insurance, and
reasonable fees and disbursements of one counsel for the sellers of Registrable
Securities (up to a maximum of $25,000 for: (i) each U.S. Registration and, (ii)
each Canadian Qualification; provided that, a concurrent U.S. Registration and
Canadian Qualification shall be subject to an aggregate maximum of $50,000), but
excluding underwriting discounts and commissions and transfer taxes applicable
to any sale of Registrable Securities.
2.6 EFFECTIVE REGISTRATION STATEMENT
A Requested Registration, a Short Form Registration or an Incidental
Registration shall not be deemed to have been effected unless, with respect to a
U.S. Registration, the registration statement relating thereto has become and
remained effective with the SEC for the period required for the distribution of
all Registrable Securities included thereunder or, with respect to a Canadian
Qualification, a receipt (or its equivalent) for the (final) prospectus relating
thereto has been issued by the applicable Canadian Commission(s).
Notwithstanding the foregoing, a Requested Registration, a Short Form
Registration or an Incidental Registration will be deemed not to have been
effected or receipted if: (i) within 60 days after it has become effective with
the applicable Commission(s), such Requested Registration, Short Form
Registration or Incidental Registration is interfered with by any stop order,
cease trade order, injunction, or other order or requirement of the applicable
Commission(s) or other governmental agency or any court
14
proceeding for any reason other than a misrepresentation or omission by any
Holder; or (ii) the conditions to closing specified in the purchase agreement or
underwriting agreement entered into in connection with such registration are not
satisfied, other than solely by reason of some act or omission by a Holder.
2.7 PRIORITY IN REGISTRATION
(a) If a Requested Registration or Short Form Registration is a firm
underwritten registration or offering and the managing underwriters
give written advice to the Corporation of an Underwriter's Maximum
Number with respect to such Requested Registration or Short Form
Registration, which is less than the aggregate number (the "PROPOSED
INCLUDED SECURITIES") of the Registrable Securities requested for
inclusion by Holders plus any securities of the Corporation that the
Corporation wishes to include for the Corporation's account or the
account of others ("ADDITIONAL REGISTRABLE SECURITIES"), then
Additional Registrable Securities shall be deducted from the
Proposed Included Securities but only to the extent necessary so
that the Proposed Included Securities (after such deduction) do not
exceed the Underwriter's Maximum Number; provided that if the
Proposed Included Securities (determined after deduction of the
Additional Registrable Securities, as aforesaid) still exceeds the
Underwriter's Maximum Number, then the Registrable Securities
requested for inclusion by Holders shall be included up to the
Underwriter's Maximum Number according to the following priority:
(i) Firstly, Registrable Securities of EdgeStone requested to be
included in such registration up to an aggregate of
$20,000,000 of Registrable Securities;
(ii) Secondly, any remaining Registrable Securities requested to be
included in such registration by EdgeStone and any Registrable
Securities held by Zarlink, PTIC and WCC, on a pro rata basis
based on the number of Registrable Securities which such
Holders requested to be included in such registration; and
(iii) Thirdly, any Registrable Securities of Systems and Knowledge,
on a pro rata basis based on the number of Registrable
Securities which such Holders requested to be included in such
registration.
(b) If an Incidental Registration is a firm underwritten registration or
offering initiated by the Corporation, and the managing underwriters
give written advice to the Corporation of an Underwriter's Maximum
Number with respect to such Incidental Registration, then: (i) the
Corporation shall be entitled to include in such registration or
offering that number of securities which the Corporation proposes to
offer and sell for its own account in such registration or offering
and which does not exceed the Underwriter's Maximum Number; and (ii)
the Corporation shall be obligated and required to include in such
registration or offering that number of Registrable Securities which
shall have been requested by Holders which does not exceed the
difference between the Underwriter's Maximum Number and that number
of securities which the Corporation is entitled
15
to include therein pursuant to clause (i) of this subsection and if
it shall be necessary to cut back the number of Registrable
Securities requested to be included therein by Holders, then the
Registrable Securities requested to be included by Holders shall be
included up to the Underwriter's Maximum according to the following
priority:
(i) Firstly, Registrable Securities of EdgeStone requested to be
included in such registration up to an aggregate of
$20,000,000 of Registrable Securities and
(ii) Secondly, any remaining Registrable Securities requested to be
included in such registration by EdgeStone and any Registrable
Securities held by Zarlink, PTIC and WCC, on a pro rata basis
based on the number of Registrable Securities which such
Holders requested to be included in such registration; and
(iii) Thirdly, any Registrable Securities of Systems and Knowledge,
on a pro rata basis based on the number of Registrable
Securities which such Holders requested to be included in such
registration.
(c) Notwithstanding that the Corporation will not be subject to any cut
back on an Incidental Registration, it will in good faith consider
the inclusion of a secondary offering component therein and if there
is an over-allotment option granted to the underwriters in
connection with an Incidental Registration, the Corporation will in
good faith negotiate with the underwriters to allow a reasonable
portion of the over-allotment option to be fulfilled by the Holders
in accordance with the priority of the Holders set forth in
paragraph (b) above, subject to the advice of the lead underwriter.
(d) EdgeStone's priority to register up to an aggregate of $20,000,000
of Registrable Securities pursuant to clauses (a) and (b) above is
intended to be cumulative, such that once $20,000,000 of the
Registrable Securities held by EdgeStone have been included pursuant
to either (a) and/or (b), then it shall no longer have priority with
respect to such $20,000,000 of Registrable Securities.
2.8 DELAY LIMITATION
Notwithstanding any other provision of this Agreement, the Corporation
shall have the right to delay any registration of Registrable Securities
requested pursuant to those provisions for up to ninety (90) days if such
registration would, in the good faith judgment of the Board of Directors,
substantially interfere with any material transaction being considered at the
time of receipt of the request from the Holders or would require the disclosure
of material information, the premature disclosure of which would materially
adversely affect the Corporation, and at the expiry of such 90 day period the
Board of Directors will review whether such registration would, in the good
faith judgment of the Board of Directors, substantially interfere with the
proposed transaction or materially adversely affect the Corporation in which
case the Board of Directors may delay such registration for an additional 90
days; provided, however, that the Corporation shall not be permitted to utilize
its delay rights under this Section 2.8 for more than 180 days in total in any
twelve month period.
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2.9 OFFERING PROCEDURE OBLIGATIONS
In connection with any offering of Registrable Securities pursuant to this
Agreement, the Corporation shall:
(a) in the case of a U.S. Registration, (1) cause each registration
statement to become and remain effective for a period of 90 days or
until the Holder or Holders have completed the distribution
described in such registration statement, whichever first occurs or,
in the case of an underwritten public offering, until each
underwriter has completed the distribution of all securities
purchased by it; provided, however, that: (i) such 90 day period
shall be extended for a period of time equal to the period the
Holder refrains from selling any securities included in such
registration at the request of an underwriter; and (ii) in the case
of any registration of Registrable Securities on Form S-3 or F-3
which are intended to be offered on a continuous or delayed basis,
such 90 day period shall be extended, if necessary, to keep the
Registration Statement effective until all such Registrable
Securities are sold, provided that Rule 415, or any successor rule
under the U.S. Securities Act, permits an offering on a continuous
or delayed basis, and provided further that applicable rules under
the U.S. Securities Act governing the obligation to file a post
effective amendment permit, in lieu of filing a post effective
amendment that (I) includes any prospectus required by Section
10(a)(3) of the U.S. Securities Act or (II) reflects facts or events
representing a material or fundamental change in the information set
forth in the registration statement, the incorporation by reference
of information required to be included in (I) and (II) above
contained in periodic reports filed pursuant to Section 13 or 15(d)
of the U.S. Exchange Act in the registration statement; (2) prepare
and file with the SEC such amendments and supplements to such
registration statement as may be necessary to keep such registration
statement effective for the period specified in paragraph (1) above
and comply with the provisions of the U.S. Securities Act with
respect to the disposition of all Registrable Securities covered by
such registration statement in accordance with the Holders' intended
method of disposition for such period; (3) immediately notify each
selling Holder and each underwriter under such registration
statement, at any time when a prospectus relating thereto is
required to be delivered under the U.S. Securities Act, of the
happening of any event of which the Corporation has knowledge as a
result of which the prospectus contained in such registration
statement, as then in effect, includes an untrue statement of a
material fact or omits to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading in light of the circumstances then existing; (4) advise
each selling Holder, promptly after it shall obtain knowledge
thereof, of the issuance of any stop order by the SEC suspending the
effectiveness of such registration statement and promptly use all
reasonable efforts to prevent the issuance of any stop order or to
obtain its withdrawal if such stop order should be issued; and (5)
permit any selling Holder who, in the sole and exclusive judgment,
exercised in good faith, of such Holder, might be deemed to be a
controlling person of the Corporation, to participate in good faith
in the preparation of such registration statement and to require the
insertion therein of material furnished to the Corporation in
writing, which in the reasonable judgment of such Holder and its
counsel should be
17
included, subject to review by the Corporation and its counsel after
consultation with such holder;
(b) furnish to each of the Holders requesting registration or
qualification such number of copies of any prospectus (including any
preliminary prospectus) or registration statement and prospectus or
registration statement supplement or amendment as they may
reasonably request in order to effect the offering and sale of
Registrable Securities to be offered and sold, but only while the
Corporation shall be required under the provisions of this Agreement
to cause the registration statement or prospectus to remain current;
and
(c) take such action in fulfilment of its obligations under this
Agreement as shall be necessary to qualify the securities covered by
such registration under such blue sky or other U.S. state securities
legislation or Canadian Securities Legislation for offers and sales
as such Holder may reasonably request, subject to the limitations
herein; provided, however, that the Corporation shall not be
obligated to (i) qualify as a foreign corporation to do business
under the laws of any jurisdiction in which it shall not be then
qualified or to file any general consent to service of process or
(ii) file a prospectus or registration statement in any jurisdiction
where it has not previously filed a prospectus or registration
statement (except as contemplated by Section 2.4).
If requested in connection with an offering in accordance with Section 2.1
or 2.2 of this Agreement, the Corporation and requesting Holders shall enter
into an underwriting agreement with a nationally recognized investment banking
firm or firms selected by the Board of Directors and acceptable to a majority in
interest of the Holders requesting the registration or qualification of their
Registrable Securities containing representations, warranties, indemnities and
agreements then customarily included by an issuer in underwriting agreements of
that type. In connection with any offering of Registrable Securities registered
pursuant to this Agreement, the Corporation shall, subject to applicable law,
(i) furnish each of the Holders requesting the registration of its Registrable
Securities, at the Corporation's expense, with unlegended certificates
representing ownership of the Registrable Securities being sold, in such
denominations as such Holders request; (ii) instruct the Corporation's transfer
agent and registrar to release any stop transfer orders with respect to the
Registrable Securities being sold; and (iii) use its best efforts to list such
Registrable Securities on each stock exchange on which the shares or other
securities of the Corporation are listed.
The Corporation may require each Holder of Registrable Securities to be
sold pursuant to this Agreement to furnish the Corporation with such information
and undertakings as it may reasonably request regarding such Holder and the
distribution of such securities as the Corporation may from time to time
reasonably request in writing.
2.10 RULE 144
With a view to making available the benefits of certain rules and
regulations of the SEC which may at any time permit the sale of the Registrable
Securities to the public without registration, at all times after 90 days after
any registration statement covering a public offering of securities of the
Corporation under the U.S. Securities Act shall have become effective, the
Corporation agrees to:
18
(a) use its commercially reasonable efforts to make and keep public
information available, as those terms are understood and defined in
Rule 144 under the U.S. Securities Act;
(b) use its commercially reasonable efforts to file with the SEC in a
timely manner all reports and other documents required of the
Corporation under the U.S. Securities Act and the U.S. Exchange Act;
and
(c) furnish to each Holder forthwith upon request a written statement by
the Corporation as to its compliance with the reporting requirements
of such Rule 144 and of the U.S. Securities Act and the U.S.
Exchange Act, a copy of the most recent annual or quarterly report
of the Corporation, and such other reports and documents so filed by
the Corporation as such Holder may reasonably request in availing
itself of any rule or regulation of the SEC allowing such Holder to
sell any Registrable Securities without registration.
2.11 INDEMNIFICATION
(a) In the event of any registration or qualification of Registrable
Securities pursuant to this Agreement, the Corporation shall hold
harmless and indemnify each of the Holders and their respective
officers, directors, partners, employees and agents, if any, from
and against any losses (other than loss of profits), claims, damages
or liabilities to which any of them may be subject under any
applicable Securities Laws or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise
out of or are based upon (i) any untrue statement or alleged untrue
statement of any material fact contained in any prospectus or
registration statement under which such Registrable Securities were
distributed, or any document incidental to the registration or sale
of such Registrable Securities, or which arise out of or are based
upon the omission or alleged omission to state therein any material
fact required to be stated therein or necessary to make the
statement not misleading, or (ii) any violation by the Corporation
of any applicable Securities Laws relating to action or inaction
required by the Corporation in connection with such registration or
sale under such Securities Laws; provided, however, that the
Corporation will not be liable in any case to any given Holder to
the extent that any such loss, claim, damage or liability arises out
of or is based upon an untrue statement or alleged untrue statement
or omission or alleged omission made in any such prospectus,
registration statement or document in reliance upon and in
conformity with information furnished in writing to the Corporation
by or on behalf of such Holder specifically for use in the
preparation thereof. This indemnity shall be in addition to any
liability the Corporation may otherwise have. Such indemnity shall
remain in full force and effect regardless of any investigation made
by or on behalf of such Holder or any director or officer, or
controlling Person of such Holder and shall survive the transfer of
such securities by such Holder.
(b) In the event of any registration or qualification of Registrable
Securities pursuant to this Agreement, each of the Holders for whom
such registration or qualification of Registrable Securities has
been made agrees, in the same manner and to the same extent as set
forth in subsection (a) of this section, to severally (and not
19
jointly and severally) indemnify and hold harmless the Corporation,
each of the other Holders and all of their respective officers,
directors, partners, employees and agents, if any, from and against
any losses (other than loss of profits), claims, damages or
liabilities to which any of them may be subject under any applicable
Securities Laws or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of
or are based upon (i) any untrue statement or alleged untrue
statement relating to information furnished in writing to the
Corporation by or on behalf of such Holder specifically for use in,
or any untrue statement or alleged untrue statement of any material
fact contained in any prospectus or registration statement under
which such Registrable Securities were distributed, or any document
incidental to the registration, qualification or sale of such
Registrable Securities, or which arise out of or are based upon the
omission or alleged omission to state therein any material fact
required to be stated therein or necessary to make the statement not
misleading, if such statement or omission was made in reliance upon
and in conformity with information furnished in writing to the
Corporation by or on behalf of such Holder specifically for use in
such registration statement or prospectus, or (ii) any violation by
the Holder of any applicable Securities Laws; provided, however,
that the liability of each Holder hereunder shall be limited to the
proportion of any such loss, claim, damage or liability which is
equal to the proportion that the public offering price of the shares
sold by such Holder under such registration statement or prospectus
bears to the total public offering price of all securities sold
thereunder, but not in any event to exceed the net proceeds received
by such Holder from the sale of Registrable Securities covered by
such registration statement or prospectus.
(c) Each of the parties entitled to indemnification pursuant to this
Section (each, an "INDEMNIFIED PARTY") shall, promptly after receipt
of notice of the commencement of any action against such Indemnified
Party in respect of which indemnity may be sought pursuant to this
section, notify the indemnifying party in writing of the
commencement thereof. The omission of any Indemnified Party so to
notify an indemnifying party of any such action shall not relieve
the indemnifying party from any liability which it may have to such
Indemnified Party on account of the indemnity pursuant to this
section, unless (and only to the extent that) the indemnifying party
was prejudiced by such omission, and in no event shall relieve the
indemnifying party from any other liability which it may have to
such Indemnified Party. In case any such action shall be brought
against an Indemnified Party and it shall notify an indemnifying
party of the commencement thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it may wish,
jointly with any other indemnifying party similarly notified, to
assume the defense thereof, with counsel reasonably satisfactory to
such Indemnified Party, and after notice from the indemnifying party
to such Indemnified Party of its election so to assume the defense
thereof, the indemnifying party shall not be liable to such
Indemnified Party under this section for any legal or other expenses
subsequently incurred by such Indemnified Party in connection with
the defense thereof other than reasonable costs of investigation. No
admission of liability shall be made by the Indemnified Party
without the consent of the indemnifying party. If, after having been
notified by the Indemnified Party of the commencement of any action
against such
20
Indemnified Party in respect of which indemnity may be sought, the
indemnifying party fails to assume the defense of such suit on
behalf of the Indemnified Party within 10 days of receiving notice
thereof, the Indemnified Party shall have the right to employ
counsel in respect of the defense of such suit and the fees and
expenses of such counsel shall be at the expense of the indemnifying
party.
(d) If the indemnification provided for in this Section 2.11 is held by
a court of competent jurisdiction to be otherwise available in
accordance with its terms but is, for any reason, held to be
unavailable or unenforceable by an Indemnified Party with respect to
any losses, claims, damages or liabilities referred to herein, then
the indemnifying party, in lieu of indemnifying such Indemnified
Party hereunder, shall contribute to the amount paid or payable by
such Indemnified Party as a result of such loss, liability, claim,
damage or expense in such proportion as is appropriate to reflect
the relative fault of the indemnifying party on the one hand and of
the Indemnified Party on the other in connection with the statements
or omissions that resulted in such loss, liability, claim, damage or
expense, as well as any other relevant equitable considerations. The
relative fault of the indemnifying party and of the Indemnified
Party is determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by
the indemnifying party or by the Indemnified Party and the parties'
relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission.
2.12 SUPERIOR REGISTRATION OR QUALIFICATION RIGHTS
Unless the Corporation obtains the prior written consent of a Holders
Majority, the Corporation shall not grant or agree to grant any registration or
qualification or other similar rights more favourable than or on parity with, or
inconsistent with, any of the rights contained herein, or any other rights that
would result in a reduction of the number of Registrable Securities includable
in any registration statement or prospectus filed under this Agreement, all so
long as any of the registration or qualification rights under this Agreement
remain in effect.
2.13 LOCK-UP AGREEMENT
Each of the Investors hereby agrees not to sell or otherwise dispose of
any Registrable Securities or other equity securities of the Corporation (except
the Registrable Securities, if any, sold pursuant to an Initial Public Offering)
for a period of up to 180 days (or such lesser period as the lead underwriter(s)
of such Initial Public Offering may agree) following the earlier of:
(i) the effective date of the registration statement, or
(ii) the date of receipt for a final prospectus
in respect of an Initial Public Offering, without the prior written consent of
the lead underwriter(s) of such Initial Public Offering, such consent not to be
unreasonably withheld or delayed; provided, however, that, subject to advice
from the lead underwriter(s), all Persons entitled to registration rights with
respect to shares of the Corporation's capital stock who are not parties to this
Agreement, all other Persons selling shares in such offering, all Persons
holding in
21
excess of 1% of the capital stock of the Corporation on a fully diluted basis
and all executive officers and directors of the Corporation shall also have
agreed not to sell publicly their shares under the circumstances and pursuant to
the terms set forth in this Section 2.13 (and for a period not less than the
lock-up period applicable to the Investors); and provided, further, however,
that if the lead underwriter releases any shares from the lock-up with respect
to such offering prior to the scheduled expiration date, the lead underwriter
shall contemporaneously release a pro rata portion of the Registrable Securities
from such lock-up.
ARTICLE 3
GENERAL
3.1 TERM
The registration and qualification obligations of the Corporation pursuant
to this Agreement shall terminate, with respect to any Holder, on the earlier
of:
(a) for the purposes of any obligation of the Corporation hereunder to
effect a U.S. Registration for the benefit of such Holder, the first
to occur of: (i) the date that all Registrable Securities held by
such Holder are registered pursuant to an effective registration
statement filed under the U.S. Securities Act; (ii) the date that
all Registrable Securities held by such Holder may be sold pursuant
to Rule 144 under the U.S. Securities Act if the Holder is able to
sell under Rule 144 during any three-month period all of the
remaining Registrable Securities issued or issuable to such Holder;
and (iii) if the only public market for the Common Shares is a stock
exchange in Canada, the date that all Registrable Securities held by
such Holder may be sold to the public on such Canadian exchange
without registration under the U.S. Securities Act;
(b) for the purposes of any obligation of the Corporation hereunder to
effect a Canadian Qualification for the benefit of such Holder, the
first to occur of: (i) the date that all Registrable Securities held
by such Holder are qualified pursuant to a prospectus under Canadian
Securities Laws; and (ii) the date that all Registrable Securities
held by such Holder may be sold under Rule 45-102 (or any successor
rule) without a prospectus or reliance on a prospectus exemption
under applicable Canadian Securities Legislation;
(c) the date that all of the Registrable Securities held by such Holder
are sold in a private transaction in which the transferor's rights
under this Agreement are not assigned pursuant to Section 3.5
hereof; and
(d) the date that is five (5) years following the date of an Initial
Public Offering.
3.2 TERMINATION NOT TO EFFECT RIGHTS OR OBLIGATIONS
A termination of this Agreement or any provision of this Agreement shall
not affect or prejudice any rights or obligations which have accrued or arisen
under this Agreement prior to the time of termination (including, without
limitation, any rights to indemnification or contribution pursuant to Section
2.11), and such rights and obligations shall survive the termination of this
Agreement.
22
3.3 CHANGES IN REGISTRABLE SECURITIES
If, and as often as, there is any change in the Registrable Securities by
way of reclassification or exchange, or through a merger, amalgamation,
consolidation or capital reorganization, or by any other means, appropriate
adjustment shall be made in the provisions hereof so that the rights and
privileges granted hereby shall continue with respect to the Registrable
Securities as so changed.
3.4 EDGESTONE PURCHASE OPTION
The parties hereto agree that, if requested by EdgeStone, any transferee
of the benefit of the EdgeStone Purchase Option shall be joined to this
Agreement as an "Investor" and shall have all the rights and privileges of an
Investor hereunder.
3.5 ASSIGNMENT
All covenants and agreements contained in this Agreement by or on behalf
of any of the parties hereto shall bind and enure to the benefit of the
respective successors and assigns of the parties hereto (including without
limitation transferees of any Registrable Securities), whether so expressed or
not, provided, however, that registration and qualification rights conferred
herein shall only enure to the benefit of a transferee of Registrable Securities
(and transferees of such transferees) if:
(a) there is transferred to such transferee at least 40% of the
Registrable Securities held by the Holder on the date hereof; or
(b) such transferee (or transferee of such transferee) is a Permitted
Transferee of the Holder.
Each permitted transferee hereunder shall execute a counterpart of and
become a party to this Agreement and shall be deemed to be an "Investor" for all
purposes. Each Holder shall notify the Corporation of each such transfer as soon
as practicable and, in any event, no later than ten (10) Business Days after
such transfer.
3.6 FURTHER ASSURANCES
The Corporation and each of the Investors covenants and agrees to take all
other necessary or desirable action within its control and to the extent
permitted by law so as to give full effect to the provisions of this Agreement.
3.7 ARBITRATION
Subject to Section 3.11, all disputes arising out of or in connection with
this Agreement, or in respect of any legal relationship associated with or
derived from this Agreement, shall be arbitrated and finally resolved pursuant
to the Arbitration Act, 1991 (Ontario). Such arbitration shall be conducted by a
single arbitrator. The arbitrator shall be appointed by agreement between the
parties or, failing agreement, such arbitrator shall be appointed in accordance
with Section 10 of the Arbitration Act, 1991 (Ontario). The place of arbitration
shall be the City of Ottawa in the Province of Ontario unless the dispute
involves EdgeStone, in which circumstance it may elect as part of the process of
selecting the arbitrator that the place of arbitration shall be
23
the City of Toronto in the Province of Ontario. The language of the arbitration
shall be English. Any notice or other document, including a notice commencing
arbitration, may be served by sending it to the addressee by facsimile in
accordance with Section 3.8 hereof. The decision arrived at by the arbitrator,
howsoever constituted, shall be final and binding and no appeal shall lie
therefrom.
3.8 NOTICES
All notices, requests, payments, instructions or other documents to be
given hereunder will be in writing or by written telecommunication, and will be
deemed to have been duly given if (i) delivered personally (effective upon
delivery), (ii) mailed by certified mail, return receipt requested, postage
prepaid (effective five Business Days after dispatch), (iii) sent by a
reputable, established courier service that guarantees next Business Day
delivery (effective the next Business Day), or sent by air mail or by commercial
express overseas air courier, with receipt acknowledged in writing by the
recipient (effective upon the date of such acknowledgement), or (iv) sent by
telecopier followed within 24 hours by confirmation by one of the foregoing
methods (effective upon receipt of the telecopy in complete, readable form),
addressed as follows (or to such other address as the recipient party may have
furnished to the sending party for the purpose pursuant to this Section 3.8):
if to the Corporation to:
Mitel Networks Corporation
000 Xxxxxx Xxxxx
Xxxxxx, XX
X0X 0X0
Attention: Chief Executive Officer
Fax: (000) 000-0000
With a copy to:
Mitel Networks Corporation
000 Xxxxxx Xxxxx
Xxxxxx, XX
X0X 0X0
Attention: Chief Financial Officer, and VP Finance
Fax: (000) 000-0000
And with a copy to:
Mitel Networks Corporation
000 Xxxxxx Xxxxx
Xxxxxx, XX
X0X 0X0
24
Attention: Corporate Legal Counsel
Fax: (000) 000-0000
And with a copy to:
Osler, Xxxxxx & Xxxxxxxx XXX
Xxxxx 0000
00 X'Xxxxxx Xxxxxx
Xxxxxx, XX
X0X 0X0
Attention: J. Xxxxx Xxxxxx
Fax: (000) 000-0000
if to EdgeStone:
EdgeStone Capital Equity Fund II Nominee, Inc.
000 Xxxx Xxxxxx Xxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xxxxxxx Xxxxxxx and Xxxxxx Xxxxx
Fax: (000) 000-0000
Fax: (000) 000-0000
if to Zarlink:
Zarlink Semiconductor Inc.
000 Xxxxxx Xxxxx
X.X. Xxx 00000
Xxxxxx, Xxxxxxx X0X 0X0
Attention: Mr. Xxx XxXxxxxx
Fax: (000) 000-0000
if to Systems, Knowledge or WCC:
c/o Xxxxxx Xxxxxx International Corporation
000 Xxxxxxx Xxxxx
Xxxxx X, Xxxxx 000
Xxxxxx, Xxxxxxx X0X 0X0
Attn: Dr. T.H. Xxxxxxxx and Xxxx Xxxxxxxx
Fax: (000) 000-0000
if to PTIC:
25
Power Technology Investment Corporation
000, Xxxxxx Xxxxxxxx
Xxxxxxxx, Xxxxxx X0X 0X0
Attn: Mr. Xxxxx Xxxxx
Fax: (000) 000-0000
3.9 WAIVERS, AMENDMENTS
Except as otherwise expressly provided in this Agreement, (i) no
amendment, waiver or termination of this Agreement shall be binding unless
executed in writing by the party to be bound thereby, and (ii) no waiver of any
provision of this Agreement shall constitute or be deemed to constitute a waiver
of any other provision nor shall any such waiver constitute a continuing waiver;
provided, however, that each party shall sign any documents amending, waiving or
terminating this Agreement or a provision of this Agreement if such document has
been consented to in writing (whether signed in one or more counterparts) by the
Corporation, EdgeStone and each other Holder of not less than 5,000,000
Registrable Securities (calculated on an as-if converted into Common Shares
basis and adjusted for share splits, consolidations and the like).
3.10 COUNTERPARTS
This Agreement may be executed in several counterparts, each of which so
executed shall be deemed to be an original and such counterparts together shall
be but one and the same instrument. Each party agrees that the delivery of this
Agreement by facsimile shall have the same force and effect as delivery of
original signatures.
3.11 EQUITABLE RELIEF
Each of the parties acknowledges that any breach by such party of his,
her, or its obligations under this Agreement would cause substantial and
irreparable damage to one or more of the other parties and that money damages
would be an inadequate remedy therefor. Accordingly, each party agrees that the
other parties or any of them will be entitled to an injunction, specific
performance, and/or other equitable relief to prevent the breach of such
obligations.
THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK.
IN WITNESS WHEREOF, each of the parties has executed this Registration Rights
Agreement on and as of the date first above written.
MITEL NETWORKS CORPORATION
By: /s/ Xxxxx Xxxxxxx
--------------------------------
Name: Xxxxx Xxxxxxx
Title: CFO
MITEL SYSTEMS CORPORATION
By: /s/ Xxxx Xxxxxxxx
--------------------------------
Name: Xxxx Xxxxxxxx
Title: Officer
MITEL KNOWLEDGE CORPORATION
By: /s/ Xxxx Xxxxxxxx
--------------------------------
Name: Xxxx Xxxxxxxx
Title: Officer
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
EDGESTONE CAPITAL EQUITY FUND II-B GP,
INC., AS AGENT FOR EDGESTONE CAPITAL
EQUITY FUND II-A, L.P. AND ITS
PARALLEL INVESTORS
By: /s/ Xxxxxxx X. Xxxxxxx
--------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Officer
EDGESTONE CAPITAL EQUITY FUND II
NOMINEE, INC., AS NOMINEE FOR
EDGESTONE CAPITAL EQUITY FUND II-A,
L.P. AND ITS PARALLEL INVESTORS
By: /s/ Xxxxxxx X. Xxxxxxx
--------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Officer
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
ZARLINK SEMICONDUCTOR INC.
By: /s/ Xxxxxx XxXxxxxx
--------------------------------
Name: Xxxxxx XxXxxxxx
Title: Sr. VP & General Counsel
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
POWER TECHNOLOGY INVESTMENT CORPORATION
By: /s/ Xxxxxx Xxxxxxx
--------------------------------
Name: Xxxxxx Xxxxxxx
Title: Executive Vice President
Finance
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
XXXXXX XXXXXX CORPORATION
By: /s/ Xxxx Xxxxxxxx
--------------------------------
Name: Xxxx Xxxxxxxx
Title: Officer
